What Happens if you File for Bankruptcy during a Personal Injury Case

Evan Rosen

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Clients who have ongoing Personal Injury cases that file for bankruptcy, quickly cease to technically be our clients. The Bankruptcy Trustee becomes our "client" as we are retained as "special attorneys" once bankruptcy has been filed. Our goal in the case remains the same, to resolve it for the most amount of compensation possible. However, instead of the client being authorized to approve a settlement, the Bankruptcy court must approve it. Should the parties settle or should the case get resolved at trial, the Trustee and/or Bankruptcy attorney will disburse the proceeds among the creditors. The client will only get money if there are funds remaining after all obligations have been satisfied. As attorneys, we also have to notify the medical providers of the pending bankruptcy and they then typically join in to make their claim for their outstanding medical bills.

Moral of the story: consult with your Personal Injury and Bankruptcy attorney before filing bankruptcy while your personal injury case is pending!